Thursday, September 17, 2009

Welcome to a little bit of your future.

The Birmingham Post revealed this week that those careful guardians of the public finances, the Conservative Party, have colluded with their lovely friends the Liberal Democrats to double Birmingham's debt in just five years. This amazing achievement saw the Regressive Partnership widen a £1.2 billion hole into a whopping £2.4 billion - and it is forecast to climb to £3 billion. That amounts to a £2000 debt for every single taxpayer and could see the cost of servicing that debt leap 1500% - adding £31 to every council tax bill within two years.

Even their own finance committee chair, James Hutchings, has described this as unsustainable. The Post offers comparisons with other major cities in England.
council debt in Manchester works out at just under £1,500 per head, in Nottingham it is less than £1,000 and just over £500 in Bristol and Sheffield.

Whitless - the figurehead for a number of vanity projects that seem destined to further increase the council debt - seems to want to shift some blame onto the Liberal Democrats, as he has to keep them on side and provide the pork for their pet projects. That said, precious little of the manifesto promises of the Liberal Democrats in 2004 have been delivered, so I can't see how he can justify that stance. Indeed, the Post slams him
the council leader’s almost messianic desire to back the biggest and grandest spending projects will always call into question his claim to be the overlord of fiscal responsibility

Meanwhile, Nick Clegg decided to speak his brains in an exclusive interview with the Post. He was quite clear that it wasn't the Lib Dem's fault. Oh no. Oddly, it wasn't the Tories either. No - the real villains in building this debt mountain is the former Labour admininstration.
The administration in Birmingham inherited an absolute mess from the outgoing Labour administration, which had blown a huge amount of money on schemes which weren’t really relevant to people’s front-line needs so it has been a real job to turn that around.

Utter cobblers. The additional £1.2 billion (and climbing) council debt has not arisen because of Labour, but solely as a result of the current administration. To say anything else after five years of rocketing debt - set against a background of generous, above-inflation increases in the government grant - goes well beyond being disingenous.

Labour left office in 2004 without ever having seen the benefit of those grant increases and having coped through over a decade of a Tory government pathologically and ideologically opposed to local government outside the control of the national system. Labour also never had the opportunity to use 'prudential borrowing.' The Tories have used it to fund Whitless' ambition, but have also relied on it to cover the costs of their headline grabbing 1.9% council tax increases, relying on the bubble of the property market to fill the coffers further. Now that nobody wants to buy the plots of land that the council is desperate to sell, the chickens are coming home to roost. To hide from that fact is political cowardice of the highest order.

Clegg offers an answer, though, and it is fiendishly simple. Just cut the salaries of every council employee earning over £100k a year by 25%. Let's just put aside the reality of taking an axe to salaries - quite apart from having to get the turkeys in charge to vote for that particular element of Christmas lunch. In Birmingham, eleven council employees earn over £100k a year. Scrapping their posts completely wouldn't get to £2 million, let alone fill up the £2.4 billion debt hole.

But that isn't the only bad news. It seems that the council is currently heading for an overspend this year in excess of £20 million - the exact figure isn't clear, but can be expected to exceed this by some distance. That translates to a 10% rise in council tax just to cover that overspend cost. Given that Stephen Hughes, the chief executive, has just realised that pulling out of national pay negotiations this year is pretty much impossible, thus dashing a cunning plan to save £11 million originally budgeted for a pay rise, the odds are that the real figure is north of £30 million.

Wait, I hear you cry - what about Business Transformation, the great saviour of the council budget? Well, we'd best not talk about that either. It seems that of the £40 million of savings due to be mystically realised this financial year, some £30 million are unlikely to materialise.

Ah well, they'll just have to pass round the axe and find some more business efficiencies, won't they? Anyone fancy closing a couple of libraries?

Don't forget that the Tories want you to look at local government as an example of how they plan to run the country.

Be afraid. Be very afraid.

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